"Most measures of market sentiment are back to where they were last May just when the S&P 500 was peaking.

Short interest has dried up to three year lows.

The VIX closed the week below 20 for the first time since last July.

Volume in leveraged ETF's versus bearish ones has risen to levels that in the past touched off interim market pullbacks.

Credit market indicators have lagged well behind the improvement in equity performance.

The S&P 500 is three standard deviation points above its 20-day moving average.

Again, the ratio of the 15-day volume puts on the S&P 100 Index to bullish call volume hit 2-to-1 last week - this happened in the February 2007, February 2011 and April 2011."_________________大道至简 锦衣夜行

Update 4:47PM: Dollar is filling that gap. That is one of the last "unfulfilled" charts I was watching.

Update 4:44PM: One of the reasons I'm bearish is because the credit markets are telling me to be bearish.
Portugal is an example of rising yield deflation. The ECB is playing "whack-a-mole" with each nation deep in debt. Greece, Italy. Well, they cannot forget Portugal huh? There are other lurkers out there too. Expect a surprise or two or three. The market is funny that way.

(ORIGINAL POST ~ 27 January 2012)

Primary count is still wave iv of (c) of [y] of Minor 2 up. Wilshire shown for superior form but the SPX would be counted the same. We'll give the bulls the benefit of the doubt since support again easily held.

However, we may have a stealth impulse pattern down from the high to today's low. That gives the bears an edge. 5 waves down implies at least another 5 waves down should follow to either form a wave iv low or even begin a larger pattern for Minor 3 down.

Its not a great impulse pattern, but you can see we can make it work. I kinda like it though. Today had a bit of a distribution feel about it. Every little dip was bought and every little rise was sold. However up volume ratio and advancers were positive pretty much all day despite the negative price bias. So that agrees with an interpretation of wave iv and suggests there is still a certain "buoyancy" in the market.

SPX shows the key price support zone and the channel. As long as they hold up in general, we have to assume this is wave iv because that what "looks best".

Primary count is the market is tracing out a corrective wave iv of (c) of [y] of Minor 2. The high of SPX 1333.47 would mark the price top of wave iii.

There are 4 things to watch and all can be seen in the SPX chart above:

1. The support zone (marked as Key Price Zone) should hold for wave iv. It has so far.

2. The lower channel line should, in general, hold for wave iv.

3. Wave iv should take the form of a corrective pattern [a]-[b]-[c] either a flat, zigzag or triangle or a combination.

4. An impulse 5 wave pattern to the downside would indicate a trend change to bearish. So far at least the wave pattern from Thursday early high does not count well as an impulse down. Therefore we assume the market is tracing Subminuette wave iv with wave v to come after the corrective is over.

Fib calculations for wave v:

This is getting ahead of things but since wave i is the proposed longest wave of the structure, wave v will be shorter than wave iii. A good target for v would be .618 times the price length of wave i in this case.

Suppose wave iv's price low is 1310 SPX. You would then take 82.25 (price length of i) multiplied by .618 and you get a projected wave v price length of 51 points. 1310 + 51 points = a top of 1361 which would just break Prechter's announced stop of 1360.

The "minimum" requirement for wave v is just to make a higher high above today's 1333 mark. So our target range for wave v would be 1334 to roughly 1361. This is very much subject to change depending on our ability to identify a completed wave iv, but I wanted to show how the thought process works in EW theory.

Why U.S. stocks could soar another 15% in 2012
February 1, 2012, 2:15 PM

The word from Wall Street is clear: It’s time to lighten up on U.S. stocks.

Don’t buy it.

Sure, the Standard & Poor’s 500 Index SPX +0.89% is up more than 20% since its October low, but Wall Street increasingly believes this rally is about to hit the wall.

Bullish sentiment among market strategistsfell to a two-year low in January, according to Bank of America Merrill Lynch. The firm’s “Sell Side Indicator” is now registering more pessimism on Wall Street than at any time since August 2009, according to a research report published Wednesday.

That’s good for stocks. Really good. In fact, the indicator suggests that U.S. stocks could post a 15% total return over the next 12 months, propelling the S&P 500 to 1475.

In case you’re wondering, the Sell Side Indicator is a contrarian gauge – bearishness is bullish, and vice versa. It’s based on the average recommended equity allocation of Wall Street strategists, which is now at 55.6% compared to a 15-year historical average of 60.7%. The bottom, bearish extreme (read: bullish for stocks) is 55.4%.

The Sell Side Indicator has been remarkably accurate over the years. Indeed, when the indicator has been this low, total returns over the following 12 months have been positive 93% of the time, with median 12-month returns of 23%, BofA Merrill data show.

“Given the contrarian nature of this indicator, we take some comfort in Wall Street’s waning optimism and the fact that strategists are increasingly recommending that investors underweight equities when compared to a traditional long-term average benchmark weighting of 60-65%,” BofA Merrill analysts noted.

Investors who were incorrectly bearish on equities are now coming in and recognizing that stocks may have some value here. Since early September, an overwhelming number of the economic releases have been on the stronger side of expectations or better than the prior period ... and the market is reassessing towards a slightly rosier economic view.

In spite of a 20% rally off the market's October lows, investors continue to remain wary of stocks.

Skepticism remains high. In a report to clients Wednesday, Bank of America-Merrill Lynch noted that Wall Street sentiment towards stocks had fallen to a two-and-a-half-year low. According to the report, Wall Street strategists are steering investors away from stocks at a level rarely seen in the past 15 years.

Why U.S. stocks could soar another 15% in 2012February 1, 2012, 2:15 PM

The word from Wall Street is clear: It’s time to lighten up on U.S. stocks.

Don’t buy it.

Sure, the Standard & Poor’s 500 Index SPX +0.89% is up more than 20% since its October low, but Wall Street increasingly believes this rally is about to hit the wall.

Bullish sentiment among market strategistsfell to a two-year low in January, according to Bank of America Merrill Lynch. The firm’s “Sell Side Indicator” is now registering more pessimism on Wall Street than at any time since August 2009, according to a research report published Wednesday.

That’s good for stocks. Really good. In fact, the indicator suggests that U.S. stocks could post a 15% total return over the next 12 months, propelling the S&P 500 to 1475.

In case you’re wondering, the Sell Side Indicator is a contrarian gauge – bearishness is bullish, and vice versa. It’s based on the average recommended equity allocation of Wall Street strategists, which is now at 55.6% compared to a 15-year historical average of 60.7%. The bottom, bearish extreme (read: bullish for stocks) is 55.4%.

The Sell Side Indicator has been remarkably accurate over the years. Indeed, when the indicator has been this low, total returns over the following 12 months have been positive 93% of the time, with median 12-month returns of 23%, BofA Merrill data show.

“Given the contrarian nature of this indicator, we take some comfort in Wall Street’s waning optimism and the fact that strategists are increasingly recommending that investors underweight equities when compared to a traditional long-term average benchmark weighting of 60-65%,” BofA Merrill analysts noted.

Investors who were incorrectly bearish on equities are now coming in and recognizing that stocks may have some value here. Since early September, an overwhelming number of the economic releases have been on the stronger side of expectations or better than the prior period ... and the market is reassessing towards a slightly rosier economic view.

In spite of a 20% rally off the market's October lows, investors continue to remain wary of stocks.

Skepticism remains high. In a report to clients Wednesday, Bank of America-Merrill Lynch noted that Wall Street sentiment towards stocks had fallen to a two-and-a-half-year low. According to the report, Wall Street strategists are steering investors away from stocks at a level rarely seen in the past 15 years.

With stocks sitting near all-time highs, some experts warn that market sentiment is getting frothy. Historically, when sentiment peaks, stocks start to sell-off.

Bank of America Merrill Lynch's Savita Subramian agrees that sentiment has improved. But she argues that market sentiment is far from those dangerously bullish levels.

"Even though the S&P 500 has already risen 10% in the six months since sentiment bottomed, history suggests that rising markets can persist for years after sentiment troughs," writes Subramanian in a new note to clients. "Some have argued that our measure of sentiment, which is based on sell side strategists’ equity allocation recommendations, does not adequately capture today’s bullish market sentiment, as evidenced by the recent surge in equity inflows and rising stock prices."

Here's a look at where BAML's popular proprietary indicator. It's still bullish for stocks.

BAML sell-side indicator

Subramanian expands on two reasons why she still thinks sentiment isn't very bullish.

1) Sell-side strategists aren't bullish

2) Equity inflows have been big, but not big enough to offset years of outflows

Greedometer explains why a global recession will begin in 2012, and the drastic impact on stocks, junk bonds, REITS, and commodities.
The collapse begins in April 2012, and will likely see the Dow drop to the 5000s in 2013.(已经各推迟一年？)

At a minimum, the reader will learn:

- That early 2012 macroeconomic and technical stock market data are exhibiting similar readings to those seen prior to the major stock market collapses initiated in 2000 and 2007, and again by the collapses initiated in 2010 and 2011 that were terminated via repeated epic amounts of fiscal and monetary policy stimulus.

- Why US stock markets likely peaked in April - May 2012, then will lose approximately 60% over the ensuing year unless $trillions more in coordinated currency printing is initiated.

- Why stock markets have repeatedly crashed since the year 2000.

- Why stock markets will continue to be very volatile for several years to come.

- Many of the players in the investment industry have an agenda that frequently does not align with yours -- and why this divergence matters.

- How to know if your investment professional is a sales person or fiduciary.

- Questions to ask a potential investment professional.

Greedometer is divided into three parts:

Part 1: The coming train wreck
This section lays the groundwork necessary for understanding the size of economic collapse likely in our immediate future. Macroeconomic data regarding the US economy, as well as that of Europe, Japan, and China is discussed.

Part 2: The Greedometers®
The second section is focused on providing an understanding of the greedometer® algorithms and the macroeconomic and technical data they incorporate. The greedometers® are algorithms designed to represent risk levels in the US stock market.

Part 3: Protect yourself from the investment industry
This section of the book provides insight into investment industry players. Their collective conspiracy of optimism and conflicts of interest distort reality and are an assault on the individual investor’s effort to obtain an accurate understanding of financial data._________________大道至简 锦衣夜行

Since the 1800s, once every 35 years US stock markets plummet until the P/E falls to 6. It dropped to 13 in March 2009. Jeff Seymour's latest book about investing -Greedometer 2.0. The Rats Are Jumping Ship- explains.

Description

Greedometer 2.0 explains why a global recession will spread in 2013 and 2014, and the drastic impact this will have on stocks, junk bonds, REITS, and commodities.
The S&P500 will likely peak in April 2013 at the 1530-1570 range, then drop to the 500s by mid/late 2014.

At a minimum, the reader will learn:

- That early 2013 macroeconomic and technical stock market data are exhibiting similar readings to those seen prior to the major stock market collapses initiated in 2000 and 2007, and again by the collapses initiated in 2010, 2011, and 2012 that were terminated via repeated epic amounts of fiscal and monetary policy stimulus.

- Why US stock markets will likely peak in April 2013, then lose 65-70% over the ensuing 1.5 years.

- Why stock markets have repeatedly crashed since the year 2000 and will continue to be very volatile for several years to come.

- Many of the players in the investment industry have an agenda that frequently does not align with yours -- and why this divergence matters.

Greedometer 2.0 is divided into three parts:

Part 1: Protect yourself from the investment industry
This section of the book provides insight into the conspiracy of optimism and conflicts of interest pervasive in the investment industry.

Part 2: The impending train wreck
This section lays the groundwork necessary for understanding the size of economic collapse likely in our immediate future.

Part 3: The Greedometers®
The second section is focused on providing an understanding of the greedometer® algorithms and the macroeconomic and technical data they incorporate._________________大道至简 锦衣夜行

The National Association of Active Investment Managers (NAAIM) member firms who are active money managers are asked each week to provide a number which represents their overall equity exposure at the market close on a specific day of the week, currently Wednesday’s. Responses can vary from +200% long to -200% short. Responses are tallied and averaged to provide the average long (or short) position or all NAAIM managers, as a group.

The NAAIM Member Exposure Average is an average of member firms’ responses to the weekly survey as of the previous Wednesday.

Current Reading:Current NAAIM Member Exposure Average: 82.77% .

Our analysis of the data shows this to be a Very High reading relative to those seen over the past year and represents a pullback from last week’s reading.

Here’s the chart from NAAIM, reflecting the survey since March 2011.
Purple is manager sentiment and green is the level of the S&P 500

Last Four Week’s Readings:

91.07%
89.85%
94.06%
104.25% (All Time High)

For reference purposes, the recent high water mark of the smoothed average has been 104.35% (2/1/2013) while the low was -3.56% on 10/5/2011.

Why should you care about this data? According the originator of the survey and past NAAIM President William Hepburn, “NAAIM advisors absolutely nailed the 2008 decline by steadily reducing equity allocations beginning in late 2007.” Hepburn goes on to note, “NAAIM members had an average equity exposure of only 19% from June 2008 through March 2009.”

Although the survey is less than five years old, Ned Davis Research notes that when the NAAIM Survey is above 73% (which occurs approximately 23% of the time), the S&P 500 has lost ground at an annualized rate of -3.8% per year. This is likely due to the fact that by the time the survey sports a high reading; most managers have already established long positions.

When the survey reading is between 14% and 73%, the S&P has gained +1.9% per year (approximately 70% of the time). And when the survey reading is below 14% the S&P has gained at a rate of +40.0% (again, a low reading suggests that managers have already sold). This reading has only occurred 6% of the time.

Which is true. A quick look at the National Association of Active Investment Managers’ weekly survey shows an all-time weekly high a month ago, at an average 104%. 100% means “fully invested.” The measure had only exceeded 100% twice before in data back to 2006 (both during the market top in 2007). The ardor has cooled somewhat during February, but it’s still at just below 83% at last check. (You can download the survey history yourself here: http://www.naaim.org/wp-content/plugins/survey-data-importer/export-survey-data-xml.php)

In recent years, you might have done well to buy stocks when this group is excessively bearish. You can’t see it in the above chart, but average manager sentiment fell below “zero” just once — meaning managers said they’re invested 100% in cash or market neutral. It happened during October 2008. The same figure was in the single digits during the early 2009 market bottom.

Mr. Risk also has his eye on (among other things) the underperformance of the MSCI Emerging Markets Indexthis year. iShares MSCI Emerging Markets Index Fund (EEM) is down by about 2% year to date. “In 2000, 2001, 2002, and 2008 EM equities fell in the first two months and went on to post negative yearly returns,” he writes.

What were the indicators which were flashing red in 1999-2000, just before the collapse, he wondered? What were they showing in 2006-7?

Seymour’s conclusion: There are nine indicators you need to watch. Just nine.

They range from the Volatility Index or “VIX,” a measure in the options market, to the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI), to the amount of stock that insiders are dumping on the market.

He put them all together in a doomsday machine he calls “the Greedometer.” It tells you just how dangerously complacent and carefree the market has become at any moment. See the Greedometer.

The VIX is down. Insider selling is up. Advisers are bullish. Margin debt — the amount investors are borrowing to buy stocks — is nearing the all-time, 2007 peak. And the economy is weakening.

In total, says Seymour, people are now even more greedy, complacent and euphoric and over the top for stocks than they were in 2007. “Stock markets die of euphoria,” he says. “These are the signals you look for.”

Any individual measure can give a false reading. Throw nine of them together, he argues, and it’s a different story. Since 1999 these nine indicators have given no false alarms, and missed no warnings.